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(Alliance News) - Redde Northgate PLC on Friday said it has - through a wholly-owned subsidiary - acquired some businesses and assets of car body repair business Nationwide Accident Repair Services as it highlighted an improvement in its trading performance.
The vehicle rental and services firm - created through the merger of peers Northgate PLC and Redde PLC - said that of Nationwide's current 102 bodyshop sites, it will take up to 77 sites. It added that the purchase will see around GBP17 million of gross assets - including a fleet of mobile repair vans to service customers - as well as around 2,300 Nationwide staff transfer to the purchasing subsidiary.
The assets were purchased for an initial cash consideration of up to GBP11 million, as well as a deferred amount of up to GBP5 million dependent on the retention of certain trade business on satisfactory terms. The acquisition will be funded from existing facilities.
"This acquisition, our first post-merger, is in line with that vision and significantly increases our
strategic and operational capability to support a wider number of business partners requiring automotive repairs. We expect this acquisition will open up new markets to the group, and in combination with an established pipeline of repair work from existing group companies, such as FMG, it is well placed to maximise future opportunities," said Redde Northgate Chief Executive Martin Ward.
The acquisition is expected to be earnings enhancing in the first full year of ownership as well as delivering a post-tax return on invested capital in excess of the group's weighted average cost of capital, Redde said.
Separately, the Darlington-based company stated it has seen monthly improvements in trading since the easing of Covid-19 related restrictions.
The level of support packages provided to customers has reduced to a minimal level and vehicles on hire have increased in all countries. It noted that accident and incident volumes have started to increase as traffic volumes pick up. Additionally, vehicle disposal channels have re-opened, with recent significant improvement in residual values compared to the year prior.
"Given the improving trading environment and the continued close management of liquidity, cash inflows have been strong and the headroom on our bank facilities has increased from GBP234 million at the end of April to GBP291 million at the end of August."
Shares in Redde Northgate were trading 6.3% higher at 203.00 pence each on Friday morning in London.
By Ife Taiwo; ifetaiwo@alliancenews.com
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